Watch Your Language with Reservation of Rents/Other Rights in Ohio Deeds

(Supreme Court of Ohio in LRC Realty, Inc. v. B.E.B. Properties, Slip Opinion No. 2020-Ohio-3196 reaffirms time-tested rule that absent an express reservation in a deed, a covenant to pay rent runs with the land)

By: Stephen D. Richman, Esq. - Senior Counsel-Kohrman, Jackson & Krantz

-A Watch Your Language Series Article-

 

As established in other “Watch Your Language” articles for this Blog, as a general rule, courts will typically uphold commercial document provisions unless they are contrary to public policy or statutory law, or the subject of a mutual mistake.

Because of this judicial deference to “plain language” within real estate and other documents, and the fact that courts, as a general rule will not look outside the four corners of a document (to consider extrinsic evidence of intent) if the language is unambiguous (sometimes referred to as the “Four Corners Rule”), you must “watch your language, and say what you mean, precisely, or a judge will decide what you meant.” And, more often than not, what a judge decides in these cases is not what at least one of the parties meant.

The Ohio Supreme Court in LRC Realty, Inc. v. B.E.B. Properties, Slip Opinion No. 2020-Ohio-3196 recently espoused this basic tenet of Ohio law with regard to deeds, when it held that: 1) absent an express reservation in a deed conveying property, a covenant to pay rent runs with the land; and 2) “subject to” language in a deed, without more does not constitute an express reservation.

Background/Facts of LRC Realty, Inc. v. B.E.B. Properties.

As succinctly stated by the Ohio Supreme Court in LRC Realty, “This case concerns the leased land beneath a cell tower and the right to receive rental payments from the tower’s owner following the transfer of the underlying property.”

The specific facts of the case are as follows:

In 1994, B.E.B. Properties (“B.E.B.”) leased a portion of its three-acre commercial property in Chardon, Ohio to Northern Ohio Cellular Telephone Company (now, “New Par”) and also granted New Par an easement on that same property. Both the lease and the easement were subsequently recorded and a cellular tower was later built on the site.

Between 1995 and 2013, there were three (3) successive sales of the property. The third sale, which occurred in 2013 was to appellant, LRC Realty, Inc. (“LRC”).  Not soon after the first sale of the property, two of the partners of appellee B.E.B. (a general partnership) transferred their interest in the partnership to the third partner and his wife, Bruce and Sheila Bird (the “Birds”). The Birds assumed that the rents from the cell tower lease were assigned to them (notwithstanding the sale of the property), and in fact, New Par sent its rents to the Birds, until 2013 when LRC inquired as to its rights to the rents, and initiated litigation seeking a declaratory judgment that it was so entitled to such rent.

The trial court held for the plaintiffs and ordered the Birds to pay the owner of the property prior to LRC, the rents from 2007 to 2013, and to pay LRC the rents the Birds received in 2013, and thereafter. The Birds appealed the trial court’s decision to the 11^th District Court of Appeals of Ohio, and the 11^th District reversed that decision. Thereafter, the appellants appealed to the Ohio Supreme Court.

Analysis of LRC Realty, Inc. v. B.E.B. Properties.

The deed for the first transfer of the property was the key to this case (at all court levels) and provided as follows: “B.E.B. Properties … the said Grantor, does for its self and its successors and assigns, covenant with … Grantees … that it will warrant and defend said premises …against all lawful claims and demands whatsoever, “such premises further to be subject to the specific encumbrances on the premises as set forth above.”

The trial court found for the plaintiffs based on long standing Ohio law, that absent a reservation in a deed conveying property, the right to receive rents runs with the land; and it found no specific words of reservation in the deed in question. The Eleventh District believed that the “specific encumbrances on the premises as set forth above” language was a reference to the previously recorded lease and easement and therefore, such language should be interpreted as a reservation of the right to receive future rental payments under the lease.

The Supreme Court of Ohio in LRC Realty, Inc. v. B.E.B. Properties boiled the case down to two issues: (1) whether the general law in Ohio still provides that absent an express reservation in a deed conveying property, the right to receive rents runs with the land; and (2) whether or not language in a deed indicating that the property being conveyed is “subject to” a recorded lease agreement and easement constitutes such an express reservation.

Citing common law as far back as 1885, and statutory law enacted in 1965 (Ohio Revised Code Section 5302.04), the Ohio Supreme Court answered the first issue in the affirmative, namely that a covenant in a lease to pay rent “runs with the land” (meaning the right to receive rents would ordinarily follow the legal title transferred by deed, and belong to the grantee), absent a specific provision in the deed, reserving in grantor the right to receive such rental payments.

 In answering the second issue in the negative (that the “subject to” language in the deed at issue did not constitute an express reservation of rents), the Ohio Supreme Court simply acknowledged and applied the “Four Corners Rule.”  As explained by the court, “When interpreting a deed, the primary goal of this court is to give effect to the intentions of the parties [and the] best way to do that is to look at the words found within the four corners of the deed itself and to adhere to the plain language used there.”

Applying this rule of law to the deed at issue, the court concluded that “no words of reservation appear on the face of the deed in connection with the words ‘rent’ or ‘rental payments,’ and accordingly, B.E.B. Properties did not reserve the right to receive such rent when it conveyed the property.“  Without such a reservation, the court explained that “B.E.B’s subsequent assignment of that [rental] interest to the Birds was thus ineffective as it is impossible to assign an interest that one does not possess.”

  

What is the moral of this story? Watch your language, and say what you mean precisely, or a judge will tell you what you meant. The general, “Four Corners Rule” re: judicial deference to the written word in commercial documents, still… rules. Consequently, use the “magic” words- “reserve,” “reserving,” or “reservation” (vs. “subject to”) if your intent is to reserve rents or other rights in the grantor.   That way, there is nothing left open to interpretation. Make the plain language, plain as day, and you won’t need your day…in court.

Several Ohio Counties Extend Real Estate Tax Due Date

By: Stephen D. Richman, Esq.-Senior Counsel-Kohrman, Jackson & Krantz

Real Estate taxes in Ohio are collected six months in arrears. This means that real estate taxes and assessments for the 2^nd ½ 2019 will be due after the first half of 2020. Most counties in Ohio would ordinarily collect the 2^nd ½  payment between mid-June and mid-July.

However, to provide additional relief to taxpayers (residential and commercial) as a result of COVID-19, many Ohio Counties have extended their second ½ 2019 due dates. The Cuyahoga County 2019 Second Half Real Estate tax deadline, for example has been extended to August 13, 2020. Tax bills are expected to be in hand approximately 20 days prior to the deadline, per state law. Cuyahoga County Taxpayers are encouraged to use regular mail, the county drop boxes at the County Administrative Headquarters and North Olmsted Auto Title, and online resources to make their payments. For more information, click on: https://treasurer.cuyahogacounty.us/.

In an effort to assist Franklin County Residents through the challenges of the COVID-19 Pandemic, the Franklin County Treasurer’s and Auditor’s Office have moved the due date for their 2nd half real estate property tax collection 45 days from June 22, 2020 to August 5, 2020. For more information regarding Franklin County due dates and payment plans, see: https://treasurer.franklincountyohio.gov/About/PropertyTaxDueDate.

The Second Half 2019 Hamilton County Real Estate Tax Bills have been extended  until July 17, 2020. For more information regarding Hamilton County real estate taxes, see: https://www.hamiltoncountyohio.gov/government/departments/treasurer.

Other counties have not modified their due dates, but are offering installment payment plans.

For example, Summit County’s Tax Installment Payment (T.I.P.) Plan will be available to property owners who are unable to make payment for second half 2019 real estate taxes due in July. Enrollment in T.I.P. can help property owners avoid late payment penalties.

The program was previously offered only to owners of residential, owner-occupied property. On April 27, 2020, Summit County Fiscal Officer Scalise lifted the occupancy requirement and expanded eligibility to rental properties, agricultural properties, commercial parcels, and manufactured homes. For more information or to establish a payment plan, email summittreas@summitoh.net; or, application forms can be downloaded from their website at https://FiscalOffice.summitoh.net.

To find out if your county has an extended tax due date, payment plan or other relief, contact your county treasurer or fiscal officer. For a directory of Ohio county treasurers, see: .http://www.ohiocountytreasurers.org/aws/CTAO/pt/sp/layout_directory?get_content_from_session=1.

Who Is the “Prevailing Party” When Awarding Attorneys’ Fees in Multiple Count, Landlord-Tenant Litigation?

(Watch your Language [with Attorneys’ Fees Provisions] & Say What You Mean, Precisely or a Judge Will Tell You What You Meant #14)

By: Stephen D. Richman, Esq.-Senior Counsel-Kohrman, Jackson & Krantz

Watch Your Language. As established in other “Watch Your Language” articles for this Blog, as a general rule, courts will uphold language in commercial agreements, unless it is contrary to statutory law or public policy. They traditionally presume that commercial parties are on more of an equal playing field and are more sophisticated concerning commercial transactions (such as commercial real estate deals), since both parties will usually have attorneys to review their documents. Because of this judicial deference to commercial language, you must, “say what you mean, precisely, or a judge will decide what you meant.” Failure to follow this axiom left the landlord in Simbo Properties, Inc. v. M8 Realty, LLC, 2019-Ohio-3091 (8^th Dist. Ct. of Appeals, Cuyahoga County) with a bill for its tenant’s attorneys’ fees in excess of the landlord’s claims for damages.

Attorneys’ Fees in General.  Ohio courts follow the so-called “American Rule,” which requires that each party involved in litigation pay his or her own attorneys’ fees.  There are, however three well-recognized exceptions to this rule: (1) where statutory provisions specifically provide that a prevailing party may recover attorneys’ fees; (2) where there has been a finding of bad faith; and (3) where the contract between the parties provides for it (sometimes referred to as “fee shifting”).

So called fee shifting or attorneys’ fees provisions are often drafted in general terms, with the parties assuming that their intent is clear. Frequent language calls for “reasonable attorneys’ fees to be awarded to the prevailing party.” Who is the prevailing party, however, when there are multiple counts, with one party prevailing on some counts and the other party prevailing on others? Does an award of “reasonable” fees mean that a prevailing party on one count is only entitled to fees related to that one count? The relatively recent case of Simbo Properties, Inc. v. M8 Realty, LLC reinforces the need to be specific and leave as little as possible to “interpretive chance.”

Simbo Properties, Inc. v. M8 Realty, LLC – (The Facts). The facts of the “Simbo” case are simple enough (the law, not so much). In December, 2012, Simbo Properties, Inc. (“Simbo”) and M8 Realty, LLC (“M8”) entered into a written lease pursuant to which Simbo leased commercial real property to M8.    The initial term of their lease agreement was for eighteen (18) months.   Simbo claimed that M8 violated several provisions of the lease resulting in the filing by Simbo of a lawsuit in the Cuyahoga County Court of Common Pleas (“trial court”).  Simbo filed a four-count complaint against M8 seeking the following:  Count 1 — rent (in excess of $150,000); Count 2 — real estate taxes ($32,158.34); Count 3 — property damage (in excess of $30,000 for flag pole and storm sewer damage); and Count 4 — breach of other pertinent lease provisions. M8 filed a counterclaim for damages claimed by M8. In pre-trial motions, M8 prevailed on Count 4 by virtue of the trial court granting M8’s motion for summary judgement. Of the remaining issues before the trial court, Simbo prevailed on Count 2, on part of Count 3 and on M8’s counterclaim. M8 prevailed upon Count 1 and part of Count 3.

After the judgement was rendered, both parties filed post-trial motions, including claims for attorneys’ fees.  Simbo and M8 based their claims for attorneys’ fees on the fact that they each prevailed upon at least part of the litigation, and their lease agreement contained a fee shifting  provision directing legal fees be awarded to the prevailing party of a lawsuit. Specifically, Section 37 of the Simbo/M8 lease agreement provides:  “If a lawsuit is filed with respect to this Lease, the prevailing party shall be entitled to collect all reasonable attorneys’ fees and costs.”

On the issue of the award of attorneys’ fees under the lease, the trial court determined that M8 was the “prevailing party” since it won the “main issue” in the lawsuit (Count 1) and, as a result was entitled to all of its attorneys’ fees, as provided in the lease agreement.

Simbo then filed an appeal of the $238,335.73 award of attorneys’ fees and expenses to M8 and also challenged other aspects of the trial court’s rulings. Simbo argued that since it prevailed on two counts of the complaint and M8’s counterclaim, it should be considered the “prevailing party”

under the lease agreement’s fee-shifting provision. 

Simbo Properties, Inc. v. M8 Realty, LLC – (Case Analysis). On appeal, the 8^th District Court of Appeals first acknowledged that there were complications inherent in the trial court’s attorneys’ fees award because:  (1) the term “prevailing party” was not defined within the lease agreement; and (2) a determination of whether Simbo or M8 is the “prevailing party” was also complicated by a jury verdict in favor of both parties.

Nonetheless, the 8^th District Court of Appeals in Simbo easily resolved the complications by virtue of precedent (prior court rulings on point) established in the 10^th District Court of Appeals case, EAC Properties LLC v Brightwell (2014-Ohio-2078). EAC Properties was a landlord-tenant case on similar facts as Simbo, whereby the landlord (EAC Properties) brought suit against its tenant, Brightwell re: $30,000 of unpaid, additional rent (deemed the “primary claim” by the EAC court because it was the largest dollar amount claimed) and $3,000 of unpaid utilities. The court in EAC Properties determined that the landlord’s primary claim for additional rent failed, and because the landlord did not prevail on that primary issue, it was not entitled to collect any attorneys’ fees under the lease agreement.

Applying what it termed EAC’s’ “main issue standard,” the court of appeals in Simbo easily determined M8 to be the “prevailing party” because it received a jury verdict on the main issue of the case; the count (Count 1) that represented the largest dollar amount, as well as being the count that counsel for M8 spent the largest percentage of time defending.

The court in Simbo did acknowledge that there is a “some relief” (vs “main issue”) standard that has been applied to define a “prevailing party” in connection with statutory claims for attorneys’ fees such as is authorized in consumer protection and civil rights laws. However, the Simbo court did not find the “some relief standard” applicable in a contractual case like Simbo, reasoning that “While public policy in consumer protection and civil rights litigation supports a broader interpretation of ‘prevailing party’, no similar need exists in negotiated commercial fee-shifting clauses between sophisticated parties… represented by counsel[who] knowingly and willingly negotiated a commercial lease agreement.”

As if to reinforce our moral of the story below, the court of appeals in Simbo also reasoned that: “If the parties had desired to define “prevailing party,” e.g., as the party that prevails on the most counts in the litigation, Simbo and M8 could have drafted that provision into the lease… or [could have] defined the term “prevailing party,” but chose not to do so.  [Accordingly], we must follow the intent of the parties and apply the terms of the lease agreement.” In other words, the parties did not say what they meant, precisely, so the judge told them what they meant.

Since the court of appeals in Simbo determined that the parties intended to define “prevailing party” as the party that prevailed upon the main issue of the case, then such party should only be able to collect its attorneys’ fees with respect to the main issue. Right? That was the landlord’s argument. Simbo argued that M8 should recover only those attorneys’ fees attributable to Count 1, the count on which M8 prevailed at the trial court.  The court of appeals in Simbo, however upheld the trial court’s award of M8’s total legal fees incurred with respect to all of the counts of the litigation, including the counts the landlord prevailed upon. The Simbo court explained that claims that involve common facts or legal theories are too difficult to divide as to the time and hours spent on litigating the individual claims.  Accordingly, the court of appeals in Simbo held that “[W]here multiple claims are rooted in the same allegations, facts, discovery, and legal arguments, a trial court does not abuse its discretion in awarding attorney fees for the time spent on [all of] the claims.”

What is the moral of this story?  “Say what you mean, precisely, or a judge will tell you what you meant.” Clearly, the landlord in Simbo did not intend to pay more in legal fees than it had in claims, especially when it prevailed on some of those claims. Nevertheless, since there was no definition of “prevailing party” in the lease, the court, in effect found one. 

Listen to what judges are saying with regard to interpreting leases and other commercial contracts: “When the language of a written contract is clear, a court may look no further than the writing itself to find the intent of the parties” [So, be clear]. Define “prevailing party” in commercial fee shifting provisions; define “reasonable fees” or consider a “floor” or “ceiling.” Also, be clear as to whether or not your intent is to be reimbursed for legal fees after a default, whether or not it ends up in litigation.

In other words, the “well-known and established principle of contract interpretation is that [c]ontracts are to be interpreted so as to carry out the intent of the parties, as that intent is evidenced or not evidenced by the contract language” [So, evidence your intent in your documents].

Ohio’s New Notary Law Definitely Worth Noting

By: Stephen D. Richman, Esq., Senior Counsel-Kohrman, Jackson & Krantz

Effective last Friday, September 20, 2019, a new law (Ohio Senate Bill 263, the Notary Public Modernization Act) went into effect which makes significant changes for Ohio Notaries Public and those who wish to become Notaries. While some may not assign preeminent importance to “notary law”, the Ohio State Bar Association adds notable perspective by stating, “the bill ensures consistent standards across the state and provides for the training and support they need to confidently and accurately witness and authenticate all the affidavits and oaths, property titles, grants, deeds, contracts, adoptions, advanced directives and powers of attorney — the documents, which represent the most important transactions in our lives and for our economy.”  

Key provisions of SB 263 include the following changes to Ohio Notary law:

1.      Who is in Charge? The Ohio Secretary of State’s office is now in charge and the place to go for anyone applying for a new Notary commission or seeking to renew their commission. Previously, Ohio’s county courts of common pleas governed the process. 

2.      Non-attorney applicants for new Ohio Notary commissions will be required to obtain a criminal records check, complete a three hour education program and take/pass a test. Those seeking to renew will need a new (not more than six months old) criminal records check and need to complete a one hour “refresher” educational program.

3.      New attorney applicants will be required to complete a three hour training program, but will not be required to obtain a criminal records check or take a test.

4.       New Fees. Ohio Notaries may now charge up to: (i) $5 for an in-person, paper notarization; (ii) $10 for electronic notarizations that are not performed online; and (iii) $25 for a remote, online notarization.

5.      “New” Forms/Rules.

a)      Jurats. (where one swears to or affirms the truthfulness of the contents of a document). For jurats, the new law includes a new statutory jurat form; or, you can still draft your own, provided, however that it clearly states that an oath or affirmation was administered.

b)      Acknowledgements. (verify the identity of the signer and confirm that the signer signed a document). For acknowledgements, you can use the “statutory short forms of acknowledgment” in the existing statute, or, you can create your own, but the new law requires that the acknowledgement: 1) contain the words “acknowledged before me” or their substantial equivalent; and 2) clearly state that an oath or affirmation was not administered.

6.      Online Notaries. Anyone who is a commissioned Ohio Notary may apply to be an online Notary. To become authorized you must: 1) Successfully complete a two hour education program; 2) pass a test; 3) pay an authorized provider a fee of $250; and 4) submit an application to the Secretary of State and pay an application fee of $20.

The Ohio Society of Notaries (http://ohionotaries.org/) has been approved by the Secretary of State as an Authorized Provider of Training & Testing under the new law. To find out more about their training offerings, or to get answers to your questions about notary procedures, signing situations, or best practices; you can call their free helplines at (614) 336-7878, (614) 348-3305, or Email them.

Don’t Get Knocked Out of the Gate before the Race Starts: Ohio Supreme Court Holds that Filing of Tax Complaint by Property Manager is Unauthorized Practice of Law

By: Stephen D. Richman, Esq.-Senior Counsel, Kohrman, Jackson & Krantz

Answering the “what, when, where and why questions” relating to real estate tax complaints in Ohio is a lot easier than answering “who” can file real estate tax complaints. The Ohio Supreme Court in Greenway Ohio, Inc. v. Cuyahoga Cty. Bd. of Revision, Slip Op. No. 2018-Ohio-4244, however, recently provided a little guidance as to answering the “who question.”

I.                   The What/When/Where/Why of Real Estate Tax Complaints in Ohio

What: Property owners, concerned that their real property tax values are too high may file a complaint to reduce the same. Those tax values, multiplied by local tax rates result in the amount that property owners will pay in real estate taxes. 

When: Complaints may only be filed between January 1 and March 31 (April 1, 2019 for tax year 2018) to contest the prior year’s tax value. For example, if a complaint is filed in 2019, it relates back to the tax value of the property as of January 1, 2018. Pursuant to Ohio statutory law, as well as Ohio Department of Taxation rules, real property in all Ohio counties is required to be reappraised every six years, and updated every three years. Normally, owners can challenge a county auditor's valuation just one time in each three-year cycle (a “triennial”) unless the property was sold in an arm's length transaction, the property lost value due to a casualty, substantial improvement was added to the property or there was an increase or decrease of at least fifteen per cent in a commercial property's occupancy.

Time is definitely “of the essence” with regard to tax complaints. If a complaint is filed even one day late, it will be dismissed.

Where/How: Property values are challenged via a "Complaint Against Valuation" that is filed with the local Board of Revision (“BOR”). The same complaint form is used statewide. It can be downloaded from county auditor websites as well as from the Ohio Department of Taxation's website. It is important to fill out the form carefully, because incorrect information can result in the dismissal of a case.  

Why: Basically, complaints are filed to petition for lower property values, because lower property values means lower property taxes. Common reasons to challenge property values include declining market values, declining rents/increased vacancies for income-producing property, obsolescence and casualty damage. In addition, people who recently purchased a property in an arms-length transaction for less than their county auditor's value, often have a strong basis for filing a tax appeal (due to case law which provides that the sale price in an arm’s length transaction between a willing seller and a willing buyer is usually considered good evidence of value).

What if there is no recent sale involved? Does it still make sense to challenge your property’s increased valuation?

The answer is, of course, it depends. It depends on the amount of additional taxes that will need to be paid, for how long, and the attorney, appraiser and other fees involved with a complaint.   For example, let’s say the county increased the value of your property by $20,000. While that number is significant, if your county’s tax rate as a percent of market value is 2%, your taxes would only increase by $400/yr.  On the other hand, a $100,000 valuation increase on a commercial property with the same tax rate would result in taxes increasing by $2,000/yr. Since valuation in Ohio is updated every three years, you could be faced with a $6,000 increase (in our commercial example) if the year of increased valuation is the first year of a triennial.  If an appraisal costs, say $2,000, and an attorney will take the case on a contingency basis, the challenge would be worth it.  You basically need to do a cost/benefit analysis for every situation in order to determine if it makes sense to challenge your property’s increased valuation.


II.  . Who may File a Real Estate Tax Complaint in Ohio

§ Property owner;

§ An attorney, licensed to practice law in the State of Ohio, representing any party properly before a BOR; and

§ Any other entity named in Ohio Revised Code Section 5715.19 (A).

Background:  At one time, the list of who could file a tax complaint was limited to attorneys and individual property owners, as a result of then current court precedent, most notably, Sharon Village Ltd. v. Licking Cty. Bd. of Revision, 78 Ohio St.3d 479 (1997).  In the aftermath of the Sharon Village decision, the General Assembly enacted legislation (H.B. 694, effective March 1999) that (among other things) expressly authorized certain non-attorneys to file tax valuation complaints on behalf of property owners, namely: (1) spouses; (2) appraisers; (3) real estate brokers; (4) accountants; and (5) officers, salaried employees, partners or members of a corporation or other business firm owner of real property (See Ohio Revised Code Section 5715.19(A)).

Two sub-issues (regarding who may file): Two sub issues have arisen, however, after the supposed clarity that H.B. 694 and O.R.C. 5715.19(A) was initially thought to provide. The first sub-issue centers around what a non-attorney agent may do during the tax complaint process, without being guilty of the unauthorized practice of law. While, at first glance, H.B. 694 appeared to provide some practicality and legal cost savings by allowing a number of non-attorney agents to file real estate tax complaints, the Supreme Court of Ohio in Dayton Supply & Tool Co., Inc. v. Montgomery Cty. Bd. of Revision, 2006-Ohio-5852 clarified that while a corporate officer (or other authorized, non-attorney) may prepare and file a complaint with a local board of revision, without engaging in the unauthorized practice of law, the non-attorney cannot do much else. In other words, corporate officers and other authorized, non-attorneys cannot make legal arguments, examine witnesses or undertake any other tasks that can only be performed by an attorney.

The second sub-issue is whether or not O.R.C. 5715.19(A)  limits non attorney agents who may file complaints on behalf of an owner to those specifically listed in the statute; and if not, what other, non-attorney agents may tax file complaints.

Greenway Ohio, Inc. v. Cuyahoga Cty. Bd. of Revision: The “second sub-issue” discussed above was recently analyzed in Greenway Ohio, Inc. v. Cuyahoga Cty. Bd. of Revision. Specifically, this case involved whether or not a property manager is among the non-lawyers authorized under O.R.C. 5715.19(A) to file a valuation complaint on behalf of a property owner.

In Greenway, the CEO of real estate management company “Property Advisors” prepared and filed (in January, 2016) a tax complaint seeking to lower the value of the property that Property Advisors managed for the owner (Greenway Ohio, Inc.; “Greenway”). The Orange City School Board of Education (“BOE”) filed a motion to dismiss the complaint on the basis that the Cuyahoga County Board of Revision (“BOR”) had no jurisdiction to hear the matter, since Mr. Sweeney, the CEO of Property Advisors was not a person authorized under O.R.C. 5715.19(A) to file a tax complaint on behalf of the owner. The BOR indicated that Mr. Sweeney was not authorized to file (and accordingly, engaged in the unauthorized practice of law), however, the BOR issued a decision on the merits, upholding the then property value of the Cuyahoga County Fiscal Officer. Greenway then appealed to the Ohio Board of Tax Appeals (“BTA”). Without conducting a hearing, the BTA determined that Mr. Sweeney was not a person authorized under O.R.C. Section 5715.19(A) to file a tax complaint, and that therefore, the BOR had no jurisdiction. The BTA then remanded the case back to the BOR with instructions to dismiss the complaint. Greenway then appealed to the Ohio Supreme Court.

The underlying premise of Greenway’s argument is that the list of persons specified in O.R.C. 5715.19(A) is not an exhaustive list and that a management company, as an authorized agent of the property owner should be able to file a complaint on the owner’s behalf. In support of its argument, Greenway cited a 2010 Ohio Supreme Court case that held for the taxpayer, and also dealt with a real estate management company (Toledo Pub. Schools Bd. of Edn. v. Lucas Cty. Bd. of Revision, 124 Ohio St.3d 490, 2010-Ohio-253). The court in Toledo Pub. Schools even acknowledged that the statute’s “list of persons is not intended as a restriction of those who may file a valuation complaint on behalf of an owner.” In fact, the Toledo Pub. Schools court stated that the statute’s intent is the opposite of limiting. The intent of O.R.C. 5715.19(A), according to the Toledo Pub. Schools court is to “widen the pool [of persons authorized to file tax complaints]by specifying that certain non-lawyers may file on behalf of an owner in spite of considerations relating to the unauthorized practice of law.”

Notwithstanding this seemingly supportive language to Greenway’s argument, the court in Greenway easily distinguished the Toledo Pub. Schools case as not relevant because in Toledo Pub. Schools, an attorney for the owner’s management company filed the complaint, vs. the management company’s non-lawyer CEO (as was the case in Greenway), and the statute certainly did not intend to prevent lawyers from filing complaints. The court in Toledo Pub. Schools came to this same conclusion by stating: “But when, as in the present case, a lawyer has prepared and filed the complaint, the list of persons who may file on behalf of the owner in O.R.C. 5715.19(A) is not relevant.”

If there is any thought left as to whether or not the “window is still open” regarding authorized agent, non-lawyers filing tax complaints who are not listed in O.R.C. 5715.19(A), the court in Greenway seemed to close any window it may have opened by concluding that “non-lawyers who are not specified in RC 5715.19(A) are not authorized to file on behalf of a property owner.”

III. What is the Moral of this Story?

Don’t get “knocked out of the gate before the race starts.” Hire a qualified attorney to file your complaint and do what lawyers are trained to do (i.e., make legal arguments, examine witnesses, file appeals and undertake any other tasks that can be performed only by an attorney).

If a non-lawyer is determined to have engaged in the unauthorized practice of law, because he/she was not authorized to file a tax complaint, or he/she validly filed a tax complaint (pursuant to O.R.C. 5715.19(A), but then crossed the “practicing law line” during the hearing, the complaint can be dismissed, and if dismissed, you won’t be able to file another complaint until the next tax year.